The Bureau of Economic Analysis (BEA) released March and first quarter (Q1) data today on personal income and outlays [DATA HERE]. The results show an increase in Q1 wages of 4.5%. However, inflation is running 6.6% on the items workers need to purchase. The net result on Main Street is unsustainable inside the economy. The U.S. stock market is responding negatively to this release.
It’s easy to get caught up in the esoteric weeds, so my effort here is to show just what is happening by putting an overlay of checkbook economics into the BEA release. If we take out the noise it is very easy to see the problem. I have modified TABLE-4 to put the results into simple understandable terms.

(Table 4, Source)
By looking at the far-right column (Q1 2022) you can see the problem. Wage growth at $268.00, minus taxes paid $51.40, leaves disposable income or take-home pay at $216.60. However, our expenses for living (shelter, food, utilities, energy, etc) cost $398.50, leaving a deficit for our income of $181.90. We either dip into our savings to cover our expenses, or we go into debt. This is not sustainable.
If you look at Q1 last year, you can clearly see where all of the inflation is coming from. That massive increase in income came from the federal COVID bailout and stimulus funds. $4 trillion directly pumped into the economy at a time when Biden justified massive bailout spending by saying they needed to offset the economic cost of prior COVID intervention (businesses and workers shut down). That is the primary source of current inflation.
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